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No case against Krushi Co-op Bank, says cops

Syed Amin Jafri in Hyderabad

The Hyderabad City has not registered any case against the promoters of Krushi Co-operative Urban Bank "since no complaint has been received from the depositors so far."

Assistant Commissioner of Police (Ramgopalpet) G V Ramana Rao told rediff.Com on Tuesday evening that "they (depositors) informally reported the matter to us but they have not lodged any formal complaint. Hence, no case has been registered as of now."

Scores of depositors are apprehensive about getting back their money in the wake of rumours that this Secunderabad-based Bank has gone "bankrupt." Though many of them have reported at Mahankali police station and poured their woes out to the police officials, they have shown reluctance to file a formal complaint.

"Their main objective is to get their money back. They have agreed to allow the bank to run. How long it can sustain itself and pay back the deposits to those wanting to withdraw their money remains to be seen. But at present, there is nothing we can do in the matter," the ACP pointed out.

As matters stood thus, depositors besieged the complex housing Krushi Co-operative Urban Bank's only branch in Secunderabad for the third consecutive day on Tuesday. Armed with deposit certificates and other documents, they made a beeline in front of the shutter entrance of the Bank, waiting for their turn to be let in by a posse of policemen. Only a few people were allowed by the cops who maintained a vigil to ensure that the handful of bank employees, reporting for duty were not manhandled.

Many depositors narrated their tales of woe to this correspondent and expressed apprehensions that they would lose their money. They said that they were "lured" by offers of interest rates of 16.5 to 17 per cent.

155 Coop Urban Banks in AP

Even as the Krushi Bank episode has caused consternation among depositors about the safety of their money in such co-operative banks, the other urban banks are hard-pressed to convince the investors that they need not worry.

Andhra Pradesh has 155 co-operative urban banks with 174 branches and a customer base of 1.46 million. They have share capital base of Rs 1.03 billion and working capital of Rs 35.69 billion. These banks had deposits of Rs 33.77 billion and advances of Rs 21.03 billion at the end of 1999-2000 financial year.

Three banks-- AP Mahesh Co-operative Urban Bank, Charminar Co-operative Urban Bank and Vasavi Co-operative Bank-- all based at Hyderabad -- have achieved the status of scheduled bank in the co-operative sector. Proposals for establishment of another 34 co-operative urban banks are currently under consideration of the Reserve Bank of India, according to co-operation department sources.

One of the 76 co-operative urban banks operating in the twin cities of Hyderabad-Secunderabad, Krushi Bank was founded in June 1998.

Operating through a single branch, it notched up total deposits of Rs 530 million during the financial year ended on March 31, 2001. On a modest net profit of six million, the bank even declared a dividend of 28 per cent.

The Bank widely advertised its schemes in the media and set an ambitious target of reaching Rs 1 billion mark in deposits during the current year. Its chairman K Venkateswara Rao was touted as the top income tax payer in Andhra Pradesh.

However, in the last 15 days, the bank reportedly paid back Rs 300 million to the deposit holders and other banks, thereby facing a liquidity crisis.

Panic spread among the depositors when the bank remained closed for two days (Saturday and Sunday), though it is supposed to function all the seven days a week. None of the bank's 10 directors was available to clear the doubts of the deposit-holders.

On the intervention of the Reserve Bank of India, the Krushi Bank opened on Monday evening and again on Tuesday for "administrative work" to enable bank manager P Srinivas Murthy to furnish the latest deposit position and other details to the RBI.

The Bank manager agreed to accept applications for foreclosure of deposits and termination of accounts and to make payments on matured deposits "subject to availability of funds."

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